Cosmofunding: investing in local infrastructure
How institutional investors can shape the future together with municipalities
The public sector in Switzerland needs major investment if it is to counter the challenges posed by climate change. The federal government, cantons and municipalities require a lot of capital for this. The Innergia Group has designed a cooperation model with which to procure these investments. Vontobel's Cosmofunding serves as a funding platform. The new partnership has got off to a successful start.
From waste incineration plants (WIPs) to educational facilities, multi-purpose buildings, and administrative buildings: Many public buildings and facilities in Switzerland will need to be renovated over the course of the coming decades. A key challenge is to ensure that our infrastructure complies with climate requirements.
New solutions are also needed in the areas of renewable power / heat generation and distribution or with regard to the careful use of resources. The state therefore has a pioneering role to play here. However, big investments are needed for this to happen. Experts estimate that the need for investment will amount to approx. 11 billion CHF per annum by the year 2050.
This is no easy feat for the Swiss Confederation, its cantons, and its municipalities, which are often restricted by debt limits when it comes to investments.
Innergia and Cosmofunding are bringing issuers and investors together
Meanwhile, institutional investors in the fixed income sector are struggling to find ways to invest. Fixed-income investments from high-quality borrowers are sought after in the low interest rate environment.
This is where the Innergia’s innovative model for municipalities comes into play. The model works as follows:
The Innergia Group forms a company based in the municipality. The municipality will basically retain a minority share. This newly formed private company buys the existing infrastructure and raises capital to expand said facility or infrastructure. Qualified experts from the Innergia Group support the company in its selection of suitable technologies and competent partners to assist with implementing projects.
Capital is raised via Cosmofunding, a new platform provided by Vontobel. It brings public borrowers seeking funding and institutional investors together. The latter is then able to invest in the future of the municipality and give important projects the go ahead - and this is backed by a guarantee from the respective Governing Body.
Cosmofunding in a nutshell
The Cosmofunding platform enables issuers (municipalities, cantons, cities as well as private companies) to put their funding needs out to tender. Institutional investors can then submit their offers, informed by an independent rating from fedafin as well as market data provided from Cosmofunding. The issuer compares the data in a transparent way and uses the conditions to decide whether they will accept or reject funding. This is the first time that private placements will be carried out online in Switzerland - using a platform that is both straightforward and user-friendly. Cosmofunding was launched in autumn 2018. Since then, the platform has grown exponentially. Over 13 billion CHF of capital has been raised since the platform's launch (correct as of December 2021).
How the PPP Innergia model works: the Rossinière example
The political municipality of Rossinière represents an example of successful fundraising using the PPP Innergia model and the Cosmofunding platform. The latter has decided to rely more on local wood to generate and distribute local energy. To this end, the Innergia Group founded the special purpose company InfraRoss SA in Rossinière. This company assumed responsibility for the municipality’s existing infrastructure for heating the district using wood and gas. The new company was quickly able to make connections with important strategic consumers within its network and double its turnover. InfraRoss SA placed its first bond transactions exclusively through Cosmofunding as a means of funding future investments. Demand was very high - within a few minutes the entire volume was placed with institutional investors.
The advantages of Cosmofunding
- Thanks to the Innergia Group’s innovative model, municipalities are now able to procure bigger investments and handle funding efficiently using Cosmofunding as a partner platform.
- Cosmofunding makes the market more efficient and provides issuers with more attractive funding options
- Institutional investors can invest their money with interested borrowers and promote local projects.
- We have made a laborious procedure (visiting different banks, obtaining offers, comparing data) into something simple and more transparent.
«Many see climate change as a challenge to which there are still few tangible answers. Our newly developed model helps to make sustainable improvements to climate change along the path to climate neutrality for future generations, and all on a municipal level.»
Do you have any questions?
You can find out more about Cosmofunding by visiting the platform's website. You can apply for access here as an institutional investor or issuer (municipalities, cantons, cities as well as private companies.
If you would like to learn more about the partnership between Innergia Group and Vontobel, please contact Bernard Voirol, Head Client Collaboration at Cosmofunding by email: email@example.com or by telephone: +41 58 283 77 44.